When a panic attack strikes, the best thing to do is sit down, take a deep breath, and do nothing. Keep in mind that not doing anything is an action, and it’s very often the best one when one is tempted top act out of emotion.
While policymakers in Washington D.C. are calling for a “balanced approach” to resolve the fiscal cliff. That’s good advice for investors. Act rationally, take advantage of tax breaks you know are there and be aware that no one actually knows how the negotiations are going got turn out.
Leaders in Washington have agreed to try and find compromises in order to resolve the changes in the tax hikes and budget reductions set to take effect in January.
One of the marks of prudent investment management is that the strategies employed should be robust enough to withstand all but the most extreme market disruptions. If your investment strategy requires you to anticipate market moves, either up or down, there is a good chance you will be wrong often enough to offset any benefits you derive from being right.